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As Washington partisans fight with smoke and mirrors over automatic federal budget cuts for the current fiscal year, it's hard to see them in proper perspective. It may help to remember that Washington is the place where the word decimation lost its original meaning of a 10% reduction and became a synonym for total destruction.

The $85 billion of funding cuts in the much-vaunted sequester controversy amounts to 2.5% off total federal spending (out of $3.5 trillion). There would be cuts of 7.9% off defense spending ($46 billion out of $540 billion), 5.3% off spending for a subset of domestic programs ($28.7 billion out of $541 billion), and 2.4% off entitlements, mostly from Medicare ($13.9 billion out of $564 billion).

For the current fiscal year, reductions in cash outlays would be even less than the funding cuts—about $40 billion, according to the Congressional Budget Office—because some appropriations provide funding for long-term projects in which the money won't be spent until later fiscal years.

Alarmist politicians prefer to speak of $1.2 trillion of budget cuts over 10 years, which sounds serious, unless we compare it with the projected $29 trillion of federal spending over the period. Big numbers help the alarmists forecast enormous job losses and huge impacts on the economy that sound so vast as to be unthinkable.

That's the trap: Things that are unthinkable will never be thought about, and never changed.

A Vision of Disaster

On Feb. 19, President Barack Obama brought uniformed firefighters and other first responders to the White House to serve as a backdrop for a speech, in which he said, "Their ability to help communities respond to and recover from disasters will be degraded." But he talked more about federal workers:

"Border Patrol agents will see their hours reduced. FBI agents will be furloughed. Federal prosecutors will have to close cases and let criminals go. Air-traffic controllers and airport security will see cutbacks, which means more delays at airports across the country."

The president also mentioned the impact on federally funded programs: "Thousands of teachers and educators will be laid off. Tens of thousands of parents will have to scramble to find child care for their kids. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer-screenings."

Most of these things can't happen right away. Most federal aid to localities has been sent already. Federal furloughs can't take place without giving one month's notice, and almost every federal worker has the right to appeal a furlough to the so-called Merit Systems Protection Board. So there will be no effect this month in the federal sector, and if a lot of workers appeal, the furlough effect could be blunted for much longer.

The Price of Uncertainty

In the private sector, life will be more complicated. Federal agencies will have to suspend some contracts with private employers, which may be forced to lay off workers or shut plants. But a federal law requires businesses with 100 employees or more to provide written notice 60 days in advance of any plant closings or mass layoffs if they are "reasonably foreseeable."

Few if any notices were issued before March 1, because the Labor Department advised employers last year that giving notice would create "unnecessary anxiety and uncertainty for workers." Cynics observed at the time that anxious and uncertain workers make for hostile voters, especially if they happen to receive a layoff warning a few days before a national election.

Some employers were still anxious and uncertain about their legal obligation to warn their workers, so on Sept. 28, the Office of Management and Budget issued a memorandum promising to support employers if they were sued for a failure to warn about plant closings or mass layoffs. Such costs will be added to federal contracts when things get back to normal.

There's a general expectation that things will get back to normal. "Nobody in America thinks you can't take a couple percentage points out of the federal budget," says John Engler, chairman of the Business Roundtable.

The automatic cuts that took effect last Friday are most significant for what they do not do. Medicare is held to a 2% reduction, while Social Security, the earned-income tax credit, food stamps, pension payments, and veterans' benefits will be unaffected. These entitlement programs are spending more than $2 trillion this year. Because those programs are so large, federal spending will continue to grow this fiscal year whether the automatic cuts take effect or not.

These programs will grow every year, even if the government can comply with all the spending restraints on the books for the future. Such details as the expiration of our temporary budget at the end of the month and the restoration of a ceiling on the federal debt may cause government shutdowns and fiscal crises, but federal spending for entitlements, also known as mandatory spending, will just keep rolling along.

Unstoppable Momentum

The CBO only looks ahead one fiscal decade. For the long view, we turn to the Government Accountability Office, which runs computer simulations to find out what might happen if we just keep rolling along.

By 2027, federal debt would surpass the peak percentage of gross domestic product reached at the end of World War II; by 2040, it would hit 200% of GDP, and it would continue to rise, thanks to deficits running at more than 15% of GDP each year, driven largely by rising retirement and medical expenses for the baby-boom generation.

This is not a prediction, just a straight-line extrapolation of current policies. Perhaps it can't happen, but we have no idea what will happen instead.

One possibility: Even a modest increase in interest rates would make our debt service far more expensive, and far less attractive to lenders. It's unthinkable, so we won't think about it or do anything about it.